Can You Hide Money in Crypto During Your Divorce?
Florida is an equitable distribution state, which means that assets obtained during a marriage (i.e. marital property) are subject to division in a divorce. In some cases, either spouse may try to conceal marital assets and/or funds to reduce what they might “lose” in the divorce. People use a variety of methods and tactics to hide assets during their divorce, including but not limited to:
- Gifting funds or assets to a loved one or friend
- Making expensive new purchases and hiding these assets
- Overspending on certain bills or expenses
- Funneling money into new savings or checking accounts
- Using businesses or properties to conceal assets (i.e. paying fake employees, delaying business growth opportunities, etc.)
Can Cryptocurrency Be Used to Hide Assets During a Divorce
In some cases, either spouse may try to hide marital funds or assets using cryptocurrency, which is virtual money that is secured by cryptography. The most popular type of cryptocurrency is Bitcoin, but there are many types of cryptocurrency.
Cryptocurrency is often used to hide assets because owners and transactions can be hard to trace. Either spouse may use marital funds or assets to obtain cryptocurrency and hide the cryptocurrency until the divorce is finalized. For instance, they may move marital funds into another account slowly and then use that money to purchase Bitcoins; they may also “gift” a family member with an expensive heirloom in exchange for virtual currency.
There is no receipt given with cryptocurrency transactions; Bitcoin transactions are recorded as blocks of encrypted data that are part of a larger block (or group) of all the transactions made by Bitcoin users. While the large group of all transactions is publicly accessible information, user identities are not public, which can make proving assets have been hidden using online currency difficult.
Uncovering Cryptocurrency in a Divorce
Cryptocurrency holders can store their money (or coins) online using a third-party exchange. While in storage, they can be accessed with a password. In many cases, people store their cryptocurrency in an offline digital wallet that will never expose the password. Without the password, the other spouse may have trouble locating the cryptocurrency.
To try and uncover cryptocurrency in order for them to be divided equally, you can hire a forensic accountant to track down assets and conduct a review of the other party’s financial disclosure. You and/or your attorney can also review bank statements and cash flow, but the more time that passes after a cryptocurrency purchase is made can make the search for the cryptocurrency more difficult.
During the discovery process, you can also request access to the other party’s tax returns, bank and credit statements, interrogatories, and other important documents. You can also subpoena the court for access to the other party’s electronic devices so a forensic accountant (or another expert) can try to find evidence on the device itself.
If you suspect the other party is hiding assets in your divorce, you should inform your attorney. They will know how to best advise you of your next steps (based on your individualized needs), and they have more legal knowledge and experience as well as potential connections with experts who can help your case.
Can You Hide Assets in a Divorce Without Consequence?
No, a person who hides assets from their spouse and the court can face serious consequences. If you attempt to conceal assets and/or falsify information within your financial disclosure, you risk losing your attorney and standing/trust in the court. The judge can require that you pay for the other party’s attorney and court fees, and you may not get as favorable a settlement in the property division determination. In some cases, you may also face criminal charges (i.e. perjury).
Worried about your spouse hiding assets or other property division-related issues? Contact Dale L. Bernstein, Chartered Law Officetoday to schedule a consultation by calling (727) 312-1112.